History, Politics, Economy and Startups in Kyrgyzstan.

Kyrgyzstan is a country of 40 tribes.
Old legend tells us the story about a princess and 40 maidens which had been regularly traveling outside their city’s walls for their morning pleasures and recreations. Once, when they had returned from their morning trip, they found their homes pillaged, city deserted and met the divine, red-colored dog which greeted them at the gate. The legend states, then, that each one of Kyrgyz tribes is descended from that godly dog and one of 40 maidens.
That’s only the legend, of course, but it reflects the fact that Kyrgyzstan territory was inhabited by many various clans and tribes for centuries. That territory had stayed under foreign domination until 1991 when Kyrgyzstan became the independent nation after the dissolution of the Soviet Union, where Kyrgyzstan was one of socialist republics.
After its independence in 1991 Kyrgyzstan had came under the rule of the Askar Akayev’s government and stayed there until Tulip revolution in 2005. This period of internal interests and political conflicts culminated in the 2010 revolution which lead to the presidency of Almazbek Atambayev.
Since then Kyrgyzstan economy had been fostered by increased influx of investments as well as by cross-border trade. However, Kyrgyzstan used to be one of the poorest Soviet Union Republics, today it’s one of the poorest Central Asian States.
Kyrgyzstan — 200-square-kilometers-sized country — lacks substantial mineral base (except some gold deposits), which is a good omen for local high-tech entrepreneurs. Driven by the force of necessity, early after obtaining its statehood, Kyrgyz government backed the rapid development of SME entrepreneurship, as one of few survival technics available for local impoverished population.
Years of ensuing political instability had brought additional regulations not only for opposition parties but also for businesses. At the same time, Kyrgyzstan still ranks much higher than neighboring bigger and richer countries on the scale of the freedom for entrepreneurs. However, for startup founders Kurdistan presents a difficult challenge.
Local, low-tech industries based economy isn’t conductive for innovations. On top, outdated telecommunication infrastructure has kept number of Kyrgyz Internet users under 35%. On the other hand, this indicator is growing 8% a year and more and more young people are joining smartphone users crowd. Faced by low wages and limited social mobility many talented young people have chosen to leave the country in a search for better future abroad. That creates a shortage of qualified workforce for startups.
Of six million population almost a million lives in Bishkek. Additionally, this city has, by far, the highest consumption standards in whole country. It limits the number of commercial mobile services users to one geographic location. More than 80 co-working spaces are already functioning there. At the same time, low-cost and low competition provides multiple local opportunities to daring high-tech entrepreneurs.
Business Notes for Startups Founders:
- political climate: moderately friendly;
- economic climate: not friendly;
- regions to focus: locally;
- industries to focus: mobile apps, FinTech, e-commerce, tourism;
- major limitations: small, low-tech economy, small population with users base, which is largely limited to Bishkek, low per capita (under $1000), aged infrastructure, low Internet penetration rate, brain drainage;
- stimulus: GDP growth has started to take off (currently stands at 4%), low tax rates;
- opportunities: niche, mobile based e-services.